Rand Health Insurance

Question 1

Rand Health Experiment

Answer 1

Large, social science experiment to study how individuals will use medical care under insurance. Took a large sample of people and followed them throughout several years to see how they are spending on health care.

Question 2

Main Point of Rand Health Experiment…

Answer 2

Wanted to provide some estimates of the effect of insurance on the demand of medical care.

Question 3

Argument of the Rand Health Experiment…

Answer 3

It is hard to rely on observational data because of endogenity problem.

Question 4

Observational Data

Answer 4

Collecting data that already exists. Not always preferred.

Question 5

Endogenity Problem

Answer 5

When data is biased or incorrect.

Question 6

Rand Health Experiment is Relevant Because of the use of….

Answer 6

Random sample; people were randomized to different health insurance plans. Applied to broad range of services.

Question 7

3 Main Finding of the Experiment Was….

Answer 7

1. As coinsurance rate increased, use of medical care decreased.
2. No statistical difference in inpatient expenses by insurance type. Will hit that cap/deductible immediately so insurance covered services.
3. As copayment decreased, demand for care became more price inelastic (do not have to pay as much as more).

Question 8

Health Effects of Experiment and Benefitted the Most…

Answer 8

1. Only identified 3 health effects: blood pressure, myopia, and dental care.
2. Poorer adults (20% income) that have increased blood pressure, myopia, and dental care have faced improvement under FFS plan.

Question 9

Health Effects Conclusion…

Answer 9

We need to be careful to assigning health insurance in order to restrain costs and maintain health.